| COVER STORY, DECEMBER 2010
BROKER OUTLOOK 2011: INDUSTRIAL, OFFICE & MULTIFAMILY
Compiled by Daniel Beaird
AUSTIN: PRIME FOR APARTMENTS
Austin’s historical multifamily fundamentals resemble a roller coaster ride, based on economic boom and bust cycles that coincide with apartment construction supply peaks and valleys. The recession of 2009 dropped occupancy to 88.7 percent and rental rates to $.91 per square foot. 2010 has experienced a slow steady improvement of apartment fundamentals – as of third quarter of 2010 citywide occupancy stands at 93.6 percent and rental rates have popped back to $.98 per square foot. The Austin MSA quarterly rent growth was an impressive 4.03 percent and annual rent growth was 5.25 percent.
SAN ANTONIO INDUSTRIAL
The San Antonio industrial market is not immune to the national economic woes but even in the midst of a slow recovery the local market is exhibiting positive signs. With controlled inventory, job growth, ongoing military construction projects, increased oilfield activity and another Caterpillar plant on the way, the industrial market vacancy rate has not seen any dramatic increase and rents are beginning to stabilize. While a great deal of the activity is organic growth by existing tenants, more national companies are looking to take advantage of San Antonio’s relatively low cost of doing business and high quality of life.
As anticipated, the San Antonio distribution warehouse market felt the impact of American Standard’s departure in the third quarter. After deciding to relocate to Dallas, the kitchen and bath manufacturer vacated two ProLogis properties leaving behind more than 408,000 square feet of vacant space at Tri-County Distribution Center and Rittiman East in the Northeast sector. Healthy leasing activity, however, quickly re-tenanted the Tri-County facility with the relocation and expansion of an existing tenant, Scholastic Books (44,800 square feet), as well as two new companies - Hollingsworth Logistics (86,400 square feet) and Phoenix Material Management (73,600 square feet). The 204,000 square feet of space vacated at Rittiman East, however, has not yet signed any new tenants.
Taking into account the American Standard relocation, local industrial properties experienced 230,548 square feet of negative net absorption in the third quarter, according to our survey of 31 million square feet of competitive industrial space. This substantial loss flattened the total amount of absorption tallied through the first 9 months of the year but the market managed to stay in positive territory with 5,159 square feet of positive net gain year-to-date.
At the close of the third quarter, the citywide vacancy rate increased to 13.9 percent compared to 13.1 percnet last quarter but, despite American Standard’s move, vacancy remained relatively stable compared to 13.8 percent recorded last year at this time.
Looking ahead, anticipated tenant moves will continue to challenge the local industrial market in 2011. Lack’s Furniture, for example, recently filed for bankruptcy protection, which will result in the closure of all its stores as well as its 308,000-square-foot distribution facility in the northeast satellite community of Schertz. Weak demand coupled with existing inventory of vacant space will hold back the economics of new construction for the foreseeable future. But even though speculative development remains at a standstill, the stability of the area economy continues to support build-to-suit projects.
Houston-based Sysco Corporation, distributor of foodservice products, is currently under construction on its 635,000-square-foot distribution complex situated on 50 acres located adjacent to the Lack’s facility at Interstate 35 and Schwab Road. The new facility will consolidate operations out of Sysco-owned properties in both San Antonio and Round Rock. In the process, Sygma — a Sysco affiliate — will relocate out of 241,500-square feet of multi-tenant space in the Rittiman Industrial Park to occupy the existing Sysco facility.
California-based Con-Way Freight recently broke ground on a new terminal facility at 1511 Cornerway in the Cornerstone Industrial Park. The development represents an $8.5 million expansion and relocation from its current operations at 5685 FM 1346.
Glazer’s Distributors announced plans to develop a 250,000-square-foot marketing and distribution facility on 35 acres near the intersection of Highway 151 and South Callaghan Road. Glazer’s will relocate from its current location at 3030 Aniol Street in the Northeast sector and will expand its current employment of 131 by 103 jobs in the new $26 million facility.
Trumping all build-to-suit activity, Caterpillar recently announced plans to build a 260,000-square-foot plant at the northwest corner of Doerr Lane and Lookout Road in the Tri-County Business Park in the Northeast sector. Upon completion in late 2011, the engine head machining operations plant will supply the nearby Seguin plant which opened earlier this year.
Although some have been reluctant to expand operations or sign long-term leases until the overall economy shows signs of further improvement, many tenants have taken advantage of the current leasing environment by locking in favorable rates and concessions in order to position themselves for future growth. The citywide average quoted triple-net rental rate remained flat at $5.57 per square foot — unchanged from last quarter as well as last year at this time. Tenants are expected to remain in the driver’s seat heading into 2011.
— John Greg Turcotte, CCIM, is senior vice president and partner with NAI REOC San Antonio.
DALLAS-FORT WORTH INDUSTRIAL
While some parts of the country continue to search for a bottom, the Dallas-Fort Worth industrial market has shown improvement in virtually all facets during the past year. Research shows the market has reached the bottom of the cycle and although the recession is not over in absolute terms, tangible improvement in fundamentals is expected during the next year.
The vacancy rate, which had been climbing due to a combination of speculative construction and low absorption, peaked back in the third quarter of 2009 at 12.6 percent and has been slowly declining since. It currently stands at 12.2 percent.
Construction deliveries for 2010 will be less than 10 percent of what was completed at the peak of cycle in 2008 when approximately 20 million square feet was delivered. Of the roughly 1.4 million square feet delivered this year, the two largest projects were build-to-suit projects for Aldi and Dallas Cowboys Merchandising. These two projects totaled approximately 900,000 square feet. The only significant speculative construction has been the development of Parc 114, a 52-acre industrial and flex business park. While speculative construction was a major component of the construction boom that occurred between 2007 and 2009, it will not be much of a factor for 2011. Construction activity within the short term will be largely limited to built-to-suit projects such as Whirlpool’s regional distribution facility, which is currently under construction in south Dallas.
Average asking rental rates decreased slightly in recent quarters, but year over year have been virtually flat, up seven cents from the third quarter of 2009 to the third quarter of 2010. With positive net absorption and an improving vacancy rate, the average asking rate is expected to remain flat for the remainder of 2010, but effective rates are anticipated to rise as landlords offer fewer concessions.
Net absorption has been positive for four consecutive quarters. Through the first three quarters of 2010, it has been a healthy 2.6 million square feet. Several large transactions contributed to the positive net absorption in the first quarter. Several medium transactions, ranging in size from 50,000 to 100,000 square feet affected the positive net absorption in the second quarter. When the impact of small-to-medium transactions begins to noticeably affect net absorption, a much healthier industrial market will be observed.
The visible improvements in the market, indicate that the ground work has been set for a resurgence in industrial capital markets. Buyers remain selective and are actively looking for good-quality, investment-grade industrial product to buy. Currently, the West Coast markets are ahead of Dallas-Fort Worth in deals closed this year. However, the abundance of capital combined with low interest rates has resulted in cap rate compression over the past few months and should result in a much higher transaction volume going forward.
Retailers are optimistic about the holiday shopping season and are shipping additional merchandise to satisfy anticipated increase in demand. The railroads have recently reported an increase in intermodal traffic approaching the volumes of time peaks seen in the 2007 to 2008 period. Dallas-Fort Worth, being an inland port with two intermodal facilities, should benefit from this increasing traffic.
As the market continues to recover, the Dallas-Fort Worth market should continue to outperform the nation as a whole. Several economic indicators like population growth and job growth have been a positive catalyst. Net job growth in the Dallas-Fort Worth metropolitan area has been a positive 28,780 jobs during the past 12 months. Dallas-Fort Worth is in a favorable position because of its central geographic location and its existing infrastructure. Low cost advantages and a pro-development culture, along with an abundance of affordable land, make this area an ideal choice for companies looking to expand or relocate their operations. Dallas-Fort Worth is usually on the short list of nationwide searches. When companies look to shorten their supply chains, Dallas-Fort Worth is almost always a logical alternative to other major industrial markets.
— Terry Darrow, SIOR, is managing director of Industrial/Supply Chain and Logistics with Jones Lang LaSalle.
EL PASO INDUSTRIAL
Like most of Texas, El Paso’s industrial real estate market started to improve in the second half of 2010. However, El Paso faced major hurdles during the recent recession, which still impact its industrial market today. The primary obstacle has been the effect of the global economic slowdown on maquiladoras across the border in Cd. Juarez, Mexico. The health of the maquiladoras, foreign-owned manufacturing operations, is the main driver behind the region’s industrial real estate base. Because of the direct connection with foreign capital and ownership, when the global economy dips, the maquiladoras suffer, as does demand for industrial real estate in El Paso. However, the reverse has not proven true lately. Despite any recent improvements in worldwide markets, the El Paso/Cd. Juarez area continues to experience slow growth. One potential explanation lies in the concerns over border-region security.
The interconnectivity between El Paso and Cd. Juarez makes the Borderplex one of the most fascinating and dynamic industrial real estate markets in the United States. It also means that El Paso’s industrial real estate market cannot be discussed intelligently without understanding its relationship with Cd. Juarez and how the two cities interact as part of the largest bi-national production sharing center in North America.
The Basics
The two cities share three international commercial crossings and a total population of more than 2 million people. Regional trade in 2009 was approximately $50 billion USD. More than 75 Fortune 500 companies maintain a presence in the area, including: GE, Hewlett-Packard, Cardinal Health, Johnson & Johnson and Cisco.
El Paso itself contains an industrial supply of 55.3 million square feet and is divided into three main submarkets: Westside (including Santa Teresa, New Mexico), Central/Northeast and the Eastside. The vast majority of the city’s industrial supply lays in the Eastside submarket due to its proximity to the Zaragoza International Bridge and Interstate 10. The current vacancy rate settled at 15.4 percent at the end of the third quarter, up from 14.1 percent at the end of 2009 with 780,000 square feet of negative absorption year-to-date.
Cd. Juarez includes an industrial base of just more than 60 million square feet. The market is mainly divided between the older northern half of the city and the newer southern half. Due to the geographic limitations of the city, with the Juarez Mountains to the west and Rio Grande River to the north and east, the city has been forced to grow south. Presently, the vacancy rate is 14.2 percent, up from 12.7 percent at the end of 2009 (both historic highs).
Market Conditions
The market decline that started in 2008 seems to have stabilized. Negative market activity in 2009, headlined by significant vacancies such as the closure of Jones Apparel Group’s 860,000-square foot distribution center in Socorro and Siemens’ metal stamping operation in east El Paso, have been replaced by a slow but steady stream of new leases and expansions in 2010. A.O. Smith (fractional horsepower motors) moved into a new building and Austin Foam (packaging materials) relocated and expanded. Both projects were more than 100,000 square feet. There were also several, smaller leases such as Ryerson (metal processing and distribution), which opened their first facility in El Paso. Ultimately, the third quarter saw positive net absorption of 131,500 square feet.
Very little speculative construction appeared during the last cycle. One reason for this is because vacancy rates stayed above 10 percent. Further, competition and demand for construction services related to the $5 billion expansion of Fort Bliss has raised the cost of doing construction. As developers watch costs rise and note high vacancies, they have become reluctant to embark on new projects. Therefore, given the lack of new product, industrial users looking for space 100,000 square feet and larger experienced a tighter market.
Cd. Juarez saw huge amounts of new construction from 2004 to 2008, recording an annual industrial supply growth rate of nearly 5 percent. During that time, the city captured some of the largest direct foreign investment projects in Mexico such as Electrolux (consumer appliances) and Foxconn (consumer electronics) as well as large amounts of speculative building. Both the Electrolux and Foxconn projects were new manufacturing campuses well in excess of a million square feet with extensive local supplier networks. The addition of new product, along with major infrastructure improvements, gave the city a place as one of the most important manufacturing centers in Mexico.
When Cd. Juarez’s maquiladora industry stopped its rapid expansion in 2008 and production level declined dramatically in 2009, the impact was quickly felt on the U.S. side of the border as plastic suppliers, logistics companies and the entire manufacturing support industry slowed. Across El Paso, firms consolidated their real estate footprints and sought more flexibility by focusing on short-term leases. These defensive strategies have paid off and positioned firms to capitalize on future options.
As 2010 comes to an end, cautious optimism takes hold. Although El Paso and Cd. Juarez continue to face challenges in the year ahead, the fundamental advantages for manufacturing companies found in the U.S./Mexico border region remain in place. These advantages will continue to attract new investments and create opportunities for El Paso’s industrial real estate market in the years to come.
— Christian Perez Giese is senior vice president and director of CB Richard Ellis’ El Paso office.
AUSTIN OFFICE
Austin’s office market is exhibiting signs of improvement. During the first three quarters of 2010, the market experienced 539,454 square feet of positive net absorption from both direct and sublease space available. Vacancy currently averages 19.3 percent in Austin’s office market and has decreased for the past 6 months. The city’s three largest submarkets, the CBD, Northwest and Southwest, have all shown slow and steady growth during the past few quarters.
Tenants started 2010 with complete uncertainty of what the future held and therefore stayed put and signed only short-term extensions in an effort to be careful. Throughout the year though, tenants have gained comfort with the economic climate and made calculated decisions to help their business grow according to their strategic plans.
Landlords have made every effort with varied concessions to retain existing tenants and are still offering concessions to attract new tenants.
Transaction volume in Austin is slow and has not shown signs of closing the gap of price expectations between buyers and sellers. Additionally, lending is still scarce in the market and therefore, I don’t expect it to change much in the next few months. The velocity may increase during the next 12 months as lenders re-enter the market, interest rates lower and the gap of expectations between buyers and sellers narrows, but until then it will remain slow.
Companies nationwide are looking to reduce their overall expenses. On a macro level, companies are looking for relocation options around the country to take advantage of state and city incentives, quality of life for their employees and an active business climate in which they can flourish. On a micro level, companies are testing the market to see what kind of concessions and rental expense reduction they can achieve by moving locations to a different building.
The recession will not likely have a long-term effect on how Austin develops, but in the short-term any new construction or developments will need to have a considerable amount of space preleased for a project to break ground.
A number of construction projects have been announced, but most will not break ground until lenders believe they have enough projected space leased. The first project that may break ground is a 16-story, 88,000-square-foot tower located in downtown Austin at the intersection of Congress Avenue and Ninth Street. Other buildings that are planned or proposed for downtown include a 16-story office tower located between West Fifth and West Sixth streets at San Antonio Street; a 13-story building near the intersection of West Cesar Chavez Street and North Lamar Boulevard; and a six-story, 135,000-square-foot office building located at 800 W. Sixth St., where Cirrus Logic Inc. is planning its new headquarters.
A few items will likely continue to encourage activity in the Austin market. First, the City of Austin, State of Texas and Austin Chamber of Commerce must continue to be extremely aggressive in recruiting companies from other parts of the county that are struggling in their existing economic climate. Second, landlords have to continue to be aggressive when pursuing tenants. There are still quite a few tenants that are testing the market and if they find that leasing rates are firming up then they will more than likely stay at their existing location.
The Northwest and Southwest submarkets have been the hotspots during the past few quarters and will likely continue this trend in the future. With the large amount of sublease space available at discounted rental rates, landlords offering direct space have had to get more aggressive and offer varied concessions to gain new tenants. On the other hand, sublease space has been an attractive opportunity for growing companies since they can rent space for a shorter term at a less expensive rate and incubate for a period of time until the economy and job growth start showing the stability they are looking for.
— Brian Butterfield is an associate with the office group of Grubb & Ellis.
HOUSTON OFFICE
Houston’s office market has weathered the storm quite well. In the third quarter of 2010, the Houston office market experienced the first quarter of positive absorption in nearly 2 years, with a net gain of 228,000 square feet of leased space. Each office submarket in Houston is relatively healthy, with many individual office buildings in the respective submarkets maintaining near full occupancies. Very limited new supply of office space will be added to the market in the years ahead which will allow Houston’s office market to stabilize further in 2011. Although Houston office occupancy levels have tapered off, rents have only declined in the Houston market by 10 to 15 percent. Houston has certainly withstood the pressures of the national economy better than most other office market in the United States. As a result of our market weathering the economic downturn quite well, international and national investors are extremely active in the Houston office market searching for acquisition opportunities in our stable market. As an example, an office building that recently sold attracted more than 30 offers from prospective purchasers. This certainly is an excellent indication of investor confidence in Houston.
According to the Greater Houston Partnership, for the 12 months ending September 2010, the Houston metro area added 3,300 jobs, a 0.1 percent increase in employment, as reported by the Texas Workforce Commission. This marks the first year-over-year gain since January 2009 and economic forecasters predict Houston will continue to experience job growth in 2011.
Following a slow 2009, large tenants have re-entered the market and numerous significant transactions have been closed in Houston to date in 2010. Through consultation with tenant representative brokers, large tenants believe the Houston market has bottomed out and now is the time to strike a deal. Several additional large lease transactions will be announced by year-end, which will further stabilize Houston’s office market outlook for 2011.
The Galleria submarket of Houston is certainly a prime example of a submarket that has weathered the market quite well. At the present time only five buildings can offer 50,000 square feet contiguous and larger blocks of space as numerous large new and expansion leases have been closed to date in the Galleria market area, including Southern Union, Suez Energy, Weatherford International and a large renewal and expansion that has been executed but not announced as of the date of this writing. 5444 Westheimer will have additional space available once the BG Group space is placed on the market. The Galleria Class A submarket is currently 89 percent leased and rents have stabilized as a result. Colvill Office Properties currently represents 2 million square feet of Class A buildings in the Galleria area and we have seen excellent leasing activity thus far in 2010.
Although the price of oil has declined from historic highs, oil is still at a quite profitable level and numerous oil companies throughout the Houston area are doing quite well as a result. Oil prices are predicted to rise and some industry experts predict we may see oil at $100 a barrel in the foreseeable future. Look for continued growth in the energy side of Houston’s economy as the international economies expand in the years ahead. Many of the large lease transactions that have closed thus far in 2010 are energy related firms and continued growth by these tenants is anticipated in 2011 as the world economy continues to stabilize. Energy firms, engineering firms and other related tenants are certainly feeling better about the future of their business based upon the offshore moratorium being lifted and Republicans taking control of the senate. Historically republican political officials have taken a more friendly approach to the energy business so this bodes well for 2011 office lease transactions among the energy firms.
We remain confident the Houston office market will continue to be one of the strongest markets in the United States in the years ahead and anticipate continued growth in 2011.
— Chip Colvill is president of Colvill Office Properties.
SAN ANTONIO RETAIL
Apartment operations in the San Antonio market will build on demand generated by the expansion of corporations still concerned over future business expenses. Non financial companies’ coffers are 25 percent above pre-recession levels and corporate payroll expansion is proceeding cautiously at best. These trends are benefiting San Antonio, which holds a large concentration of back-office call centers due to its central location and bilingual work force. Several companies, including West Corp., Kohl’s, Chase and Allstate, are adding thousands of low-paying customer support positions, which typically prop up apartment demand. Areas where supply growth was particularly robust over the past 2 years, such as the Far North Central and Far West submarkets, will post the largest job-growth related improvements in vacancy. Owners in these locations utilized aggressive leasing incentives to pull renters into new units, leaving plenty of empty Class B/C units for newly employed workers to occupy.
Optimism about the recovery in local apartment conditions has spilled into the investment arena, with long-term hold buyers moving into the market to acquire stabilized assets. Class B properties, in particular, remain sought-after by local and national syndicates targeting highly occupied complexes at cap rates in the low- to mid-7 percent range. Many of these buyers have been priced out of the national Class A apartment market by REITs and institutions seeking to place capital and willing to bid aggressively for best-in-class offerings. Top-tier properties that trade in San Antonio this year will be offered at first-year yields near 6 percent, and REITs will remain interested in the area when listings arise. A thin pipeline of developer-owned Class A properties will limit the number of deals that come to market, however, forcing most buyers to consider mid-tier assets.
Local payrolls will expand 2.4 percent this year as metro employers hire 20,000 workers. Last year, additions totaled 7,500 jobs. After 2,700 apartments came online in 2010, development will slow to 1,500 units this year, a modest 1 percent increase in stock. As a result of the slowdown in new construction, there will be positive absorption of apartment units, thus placing downward pressure on vacancy. Marketwide apartment vacancy will fall to 7.6 percent in 2011, a 140 basis point improvement from last year. Apartment demand will rise 2.6 percent. Asking rents will reach $744 per month this year as effective rents climb to $697 per month, annual gains of 4.6 percent and 5.1 percent, respectively. The military’s planned consolidation of medical training at Fort Sam Houston will support apartment operations in the Northeast and adjacent submarkets. When completed this year, 5,000 permanent jobs and 4,000 students will be located in the area.
Looking ahead, the quest for yield, the belief that the worst is over for employment conditions and unusually low interest rates are the key factors behind capital flows into the middle and upper-end of the multifamily investment sales market. Investors will pay a premium to acquire these assets, which are typically located in supply-constrained markets. However, premium-priced acquisitions that face large volumes of new supply during the intended hold period will clearly be riskier and investors should take caution in their underwriting assumptions. Institutional and major private investors typically have a long-term hold strategy averaging 7 to 10 years, which results in acquisitions placing more emphasis on risk-adjusted cash-flow yields and less weight on current on terminal cap rates. In most cases, investors are acquiring top-quality assets with positive leverage, which also lowers the risk.
— J. Michael Watson is the regional manager of Marcus & Millichap’s San Antonio office.
AUSTIN RETAIL
Austin remains a popular destination for institutional and private multifamily investors.
In the first half of 2010, there was a scarcity premium as buyer demand far exceeded the number of properties offered for sale. It was common to give 50-plus property tours and receive roughly 40 offers for a fully marketed Class A apartment community. The enormous amount of investment capital raised in 2008 and 2009 struggled to find a home in early 2010. As apartment fundamentals improved, interest rates decreased and cap rates compressed, more product came to market in the third quarter of 2010. Subsequently, the number of investor tours and offers has been cut in half. Offers today are coming from well-capitalized low leverage private investors, pension fund advisors, private funds and public REITs.
Urban Class A cap rates have dropped from 6.5 percent in late 2009 to an average of 4.75 percent today. Suburban Class A cap rates are trading around 5.25 percent. The 1980s to 1990s vintage, B class product, is trading in a range from 5.75 to 6.75 percent based on quality and location. The highest conventional apartment sales prices have occurred in and around the Central Business District (CBD) where mid-rise Class A product is trading in the $150,000 to $180,000 per unit range. Suburban Class A garden-style product is trading in the $75,000 to $85,000 per unit range. Class B product has traded in the $40,000 to $50,000 range, while Class C apartments have averaged $15,000 to $35,000 per unit, heavily dependent upon product condition.
The year one cap rate is no longer the metric of choice for Austin’s multifamily investors. Buyers appear to be paying an aggressive year-one cap rate, but the common belief is that this cap rate is based on short-term depressed market fundamentals. Austin apartment communities are recovering from apartment over-supply that created up to 3 months of rental concession. The supply pipeline has been turned off just as the economy appears to be gaining steam and concession is on the decline. The popular belief is that Austin’s economic recovery will generate 5 to 7 percent annual rent growth for the next 5 years. Investors are using the 5-year Internal Rate of Return (IRR) projection as opposed to the year-one cap rate to evaluate an asset’s investment potential. Recent trades in Austin have illustrated that investors are modeling to a leveraged 13 to 15 percent IRR.
Conventional Apartment Supply
Austin is coming off 2 years of heavy apartment construction and heading into a period of near zero supply. Roughly 7,500 units per year were built in 2008 and 2009, and today, there is zero in the conventional apartment pipeline. Recovering apartment fundamentals and the scarcity of bank financing should keep supply in check for the foreseeable future. Due to Austin’s rapid growth and congested traffic, it is not possible to make blanket assumptions about how supply will affect the entire MSA. It is important to dissect the city by submarket to note the effect supply will have on a particular area. In 2008, the top submarkets for supply were Round Rock, Far North, South Austin, and the CBD. Currently these submarkets are in recovery mode, experiencing 90 percent-plus occupancy and concession burn-off. The suburban submarkets are undergoing a slow steady recovery, while the CBD is popping. The CBD submarket has experienced a 10.3 percent increase in quarterly rent growth and a 15 percent annual growth rate. The sharp turn in rental rates is the result of supply going to zero and demand from urban professionals that want to live, work and play in the CBD environment.
Downtown Development
Downtown Austin has undergone a dramatic transformation in the past 5 years and continues to transform into an urban living oasis. Towering high-rise residential buildings have sprung up across the city and are now dominating the skyline. The city of Austin has encouraged the development of high-density mixed use residential projects with ground floor retail in an effort to create a new, pedestrian friendly, urban core. The goal of city government is to have 25,000 people living in downtown by 2015 (currently 9,500 people reside in the CBD). Developers embraced the initiative and since 2007, downtown Austin has seen the construction of roughly 2,300 apartment units and 1,177 condominium units.
The first wave of downtown condominium development included Milago, The Shore, and 360. These projects had the benefit of being marketed prior to the recession and successfully sold out. Downtown condominiums are attracting young professionals, empty nesters, and University of Texas alumni, all wanting the convenience of an urban environment surrounded by a vibrant music and cultural scene.
— Patton Jones is managing principal of the Austin office of ARA.
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